Uncollectible Accounts, Using Direct Write-Off Method

Illustrate the effects on the accounts and financial statements of the following transactions in the accounts of Valley Care & Supplies Co., a local hospital supply company that uses the direct write-off method of accounting for uncollectible receivables:

If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

March 18. Received $9,625 on an account.

		Balance Sheet
		Assets			=	Liabilities	+	Stockholders' Equity
		CashMerchandise InventoryNo effectNo effect	+	Accounts receivableAllowance for doubtful accountsNo effectNo effect	=	Accounts payableAllowance for doubtful accountsNo effect	+	Capital stockRetained earningsNo effect
	Mar. 18.	fill in the blank 5		fill in the blank 6		fill in the blank 7		fill in the blank 8
	Statement of Cash Flows					Income Statement
	FinancingInvestingOperatingNo effect	fill in the blank 10				Cost of merchandise soldSalesNet incomeNo effect		fill in the blank 12

March 18. Wrote off the remaining $87,545 owed on account as uncollectible.

		Balance Sheet
		Assets			=	Liabilities	+	Stockholders' Equity
		Accounts receivableAllowance for doubtful accountsNo effect	+	CashMerchandise inventoryNo effect	=	Accounts payableAccounts receivableNo effect	+	Capital stockRetained earningsNo effect
	Mar. 18.	fill in the blank 17		fill in the blank 18		fill in the blank 19		fill in the blank 20
	Statement of Cash Flows					Income Statement
	FinancingInvestingOperatingNo effect	fill in the blank 22				Bad debt expenseCost of merchandise soldSalesNo effect		fill in the blank 24

Aug. 29. Reinstated the account that had been written off on March 18. (Do not record the collection of cash yet.)

		Balance Sheet
		Assets			=	Liabilities	+	Stockholders' Equity
		Accounts payableAccounts receivableNo effect	+	Bad debt expenseMerchandise inventoryNo effect	=	Accounts payableCashNo effect	+	Capital stockRetained earningsNo effect
	Aug. 29.	fill in the blank 29		fill in the blank 30		fill in the blank 31		fill in the blank 32
	Statement of Cash Flows					Income Statement
	FinancingInvestingOperatingNo effect	fill in the blank 34				Bad debt expenseCost of merchandise soldSalesNo effect		fill in the blank 36

Aug. 29. Received $87,545 cash in full payment for the reinstated account.

		Balance Sheet
		Assets			=	Liabilities	+	Stockholders' Equity
		Accounts payableCashNo effect	+	Accounts receivableBad debt expenseNo effect	=	Accounts payableCashNo effect	+	Capital stockRetained earningsNo effect
	Aug. 29.	fill in the blank 41		fill in the blank 42		fill in the blank 43		fill in the blank 44
	Statement of Cash Flows					Income Statement
	FinancingInvestingOperatingNo effect	fill in the blank 46				Cost of merchandise soldSalesNet incomeNo effect		fill in the blank 48